A letter came into the Accountancy Age offices last week from chartered accountant Steve Reynolds, who explained how a client had received a self-assessment refund of £17,000 for 2005/06, even though he was actually only owed £500
Reynolds admitted that the client had filed in the online self-assessment
form incorrectly, which probably explained the massive overpayment, but he was
still baffled as to how such a substantial amount of money could be paid out
erroneously without any checks.
Reynolds makes a good point, especially when one takes into the account that
the National Audit Office recently revealed that HM Revenue & Customs was
encountering attacks on the self-assessment system from organised criminals.
In one fraudulent attack alone, the NAO estimated £34m in repayments had been
made to criminals targeting self-assessment. Advisers said they were stunned by
the fact that SA had been targeted, as it was a fairly straightforward process.
But should we be surprised, especially when one considers cases of
overpayments such as the one put forward by Reynolds. If an honest taxpayer can
receive a £17,000 overpayment from HMRC through a simple error, imagine the sums
that could be fleeced by a gang of determined and resourceful criminals who want
to take the taxman for us much as they can.
In its report, the NAO said that HMRC needed to improve its systems as they
were unable to ‘prevent or detect error and irregularities’.
HMRC would do well to take on that advice. Sorting out large incorrect
repayments may be the best way to cut off any scams that have seized on
self-assessment as a soft target.
Nicholas Neveling is a reporter on Accountancy Age